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Concerns Raised Over Sewer Plant Loan Payments

SNOW HILL – If enough users cannot be added to make the loan payments for the replacement Mystic Harbor wastewater treatment plant, the county has said it will simply raise rates for the current ratepayers.

Worcester County will take out a 40-year, $5.1 million loan from the United States Department of Agriculture (USDA) to build a new Mystic Harbor sewer plant. The rest of the costs will be covered by a $3.7 million USDA grant. The Worcester County Commissioners voted unanimously to go ahead with the project Tuesday.

The new plant, replacing a failed plant, will be built to handle 1,666 EDUs, or units of water and wastewater service. The wastewater plant will be designed for a 450,000 gallons per day capacity (gpd), with the option of adding another 150,000 gpd in the future.

Each current ratepayer will be charged an additional $32 per quarter, or $128 per year, to handle debt service on the new plant. However, that number is dependent on the service area adding another 666 ratepayers to the current 1,000 users.

New users will pay an equity contribution when they tie into the Mystic Harbor wastewater system, calculated based on the number of years elapsed between the construction of the new plant and the addition of the new connection, at $128 a year.

“It would be a little bit of a balancing act getting the whole thing up and rolling but this is the most cost effective way to get the new user in the system,” said Jennifer Savage, enterprise fund controller.

Meanwhile, as new users come into the system, the wastewater plant would need to find funding to make the loan payments in the interim.

The plan appears to be “build it and they will come,” said Commissioner Virgil Shockley, who said he was disturbed that the project needed to reach capacity usage before the loan could be paid solely by the ratepayers.

Until the 1,000 ratepayers grow by 666, the service area would be running a deficit over the new wastewater treatment plant, Shockley pointed out. “Where is the money ‘til we get to that point?” Shockley asked.

The service area would need $70,000 a year to make up the difference between what the current ratepayers would be charged, and what the new users would be charged, said county attorney Sonny Bloxom.

“Probably the General Fund will make us an interfund loan,” said Savage.

If the users do not increase to the break even level, which is also the full capacity of the new plant, the plant will not pay for itself, Shockley said.

The service area can use equity contributions related to water services to pay wastewater plant debt service, Savage said.

It could take 10 years to add 100 new users, said Commissioner Bobby Cowger. A $70,000-a-year shortfall would add up to $700,000 over 10 years, it was pointed out.

The wastewater plant needs 15 new customers a year, paying equity contributions, said assistant county administrator Kelly Shanahan. Some of the costs would be made up as properties were connected to the new plant.

“You’ll have more than 15,” predicted Commission President Bud Church.

“Your EDU charge is adjustable annually. You have a fallback position to adjust it to a higher number for debt service,” said county administrator Gerry Mason.

If no new properties were connected to the wastewater plant and therefore no new ratepayers were brought in, the rate could be doubled, Savage said.